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Zogenix’s battle with the Commonwealth of Massachusetts continues

Last week, the District of Massachusetts issued its decision on Round 3 of the battle between Zogenix, Inc. and the Commonwealth of Massachusetts over Zohydro ER, an extended release hydrocodone drug product that was approved by the FDA in 2013. SeeZogenix, Inc. v. Baker, 2015 U.S. Dist. LEXIS (D. Mass. Mar. 17, 2015). This is a year-long battle in which Massachusetts has tried to regulate the use of Zohydro, first banning it entirely and later implementing a series of regulations intended to restrict its use.

First, a history of the earlier rounds: In Round 1, the Massachusetts governor declared opioid abuse and overdosing to be a public health emergency and authorized the department of health to issue an emergency order that banned prescribing, ordering, dispensing or administering Zohydro (it didn’t mention Zohydro specifically, but described a category of drugs that included only Zohydro). Zogenix moved for a preliminary injunction and won. The FDA had already approved Zohydro for marketing. And so Massachusetts’s ban failed, as we put it, the “you can’t do that” test. The emergence order was preempted.

In Round 2, with the department of health licking its wounds, various Massachusetts boards of registration stepped into the battle. Two boards, the Board of Registration in Medicine and the Board of Registration of Physicians Assistants, promulgated emergency regulations that required prescribers, before they could prescribe Zohydro, to provide a Letter of Necessity stating that all other pain management treatments had “failed.” Also, Massachusetts’s Board of Registration of Pharmacy created certain “handling” requirements, including prohibiting anyone at a pharmacy who wasn’t the actual pharmacist from handling Zohydro. Zogenix once again sought injunctive relief, arguing that these regulations were preempted. It won a partial victory. The court agreed to enjoin the regulation requiring the Letter of Necessity from prescribers. Its requirement that other pain-management options have “failed” differed from the treatment indication for which the FDA had already approved Zohydro. And so it was preempted. The pharmacy regulations restricting the handling of Zohydro stood. The court did suggest, however, that Zogenix’s challenge to those regulations could be successful if Zogenix were later able to develop facts proving that the regulations would alter pharmacies’ willingness to carry Zohydro. We blogged about Round 2 here.

After Round 2 but before Round 3, a bit of adjusting happened. The medicine board and the physicians assistants board changed their regulations. They no longer require that other pain-management options have “failed” before Zohydro can be prescribed. Instead, the prescriber must only deem other options to be “inadequate.” This more closely mirrors the indication for which the FDA approved Zohydro and, with Zogenix putting up little fight, the court lifted its injunction on the Letter of Necessity. The pharmacy board also changed its regulations. They now allow pharmacist interns, not just pharmacists, to handle Zohydro. The other pharmacy board regulations on the handling of Zohydro remained in place. SeeZogenix, 2015 U.S. Dist. LEXIS, at *7-11.

That takes us to Round 3. Zogenix believed that the pharmacy board’s regulations were still improper, and so it filed a third amended complaint. Id. at *11. Massachusetts moved to dismiss. The court issued its opinion last week. Zogenix made a number of Constitutional claims based on the commerce, equal protect and contracts clauses, but we won’t address them here. In short, the court dismissed those claims.

But Zogenix also claimed that the pharmacy board’s “handling” regulations were preempted. It argued that “[t]aken together, these requirements continue to impose draconian restrictions on pharmacists’ abilities to stock or dispense Zohydro ER that . . . amount to an effective ban of the drug in Massachusetts.” Id.(quoting the third amended complaint).

In support of this argument, it’s important to understand that the pharmacy board’s regulations did more than restrict the handling of Zohydro to only pharmacists and pharmacist interns. It required Zohydro to be stored in a locked cabinet at all times. The container for the drug must be child proof. The prescriber must have sent the pharmacy a Letter of Necessity that includes a diagnosis, treatment plan, verification that other pain-management options are inadequate, an indication that a risk assessment was performed, and an indication that the patient and doctor entered into a pain management treatment agreement or that the prescriber determined that no such agreement was unnecessary. The pharmacy must also include with each prescription a warning approved by the pharmacy board and provide counseling to each patient on the risks of Zohydro. Id. at *7-10 n.8.

Massachusetts responded to Zogenix’s argument by “contending that the claim should be dismissed because it is facially absurd and unbelievable.” Id. at *14-15.

The court laid out the legal basis for Zogenix’s preemption claims:

[T]he issue is one of obstacle preemption, which occurs when, “under the circumstances of [the] particular case, [the challenged state law] stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Hines v. Davidowitz, 312 U.S. 52, 67, 61 S. Ct. 399, 85 L. Ed. 581 (1941). The obstacle preemption doctrine holds that “[i]f the purpose of the [federal] act cannot otherwise be accomplished--if its operation within its chosen field else must be frustrated and its provisions be refused their natural effect--the state law must yield to the regulation of Congress within the sphere of its delegated power.” Savage v. Jones, 225 U.S. 501, 533, 32 S. Ct. 715, 56 L. Ed. 1182 (1912).

Id. at *15.

Given the unusual posture of this case, granting Massachusetts’ motion to dismiss would be a loss for preemption. But the court denied the motion. The court reiterated what it had stated in Round 2— that Zogenix could provide more facts as the litigation moved forward to support its argument that these regulations served essentially as a ban of Zohydro:

On the record before me last summer, I could not allow Zogenix’s motion to enjoin the “pharmacist-only” BORIP regulation because Zogenix had not offered sufficient evidence of the regulations’ effect on Zohydro’s availability. 2014 U.S. Dist. LEXIS 92382, [WL] at *5. But I did not foreclose the possibility that “a more detailed submission,” informed by a “record of enforcement,” might show “whether . . . an obstacle [to the FDCA’s objectives] exists.” Id. Zogenix may be able to show, through survey evidence or third-party discovery from pharmacies and physicians, that Massachusetts pharmacies are not stocking its drug because of handling difficulties caused by the regulations and that their failures to stock the drug are affecting physicians’ prescribing practices. Zogenix has alleged such facts in its Complaint, and I must take those allegations as true at this stage. That the defendants are skeptical that the evidence will support those allegations is immaterial, because, if the allegations are proven, Zogenix will be entitled to relief. The defendants’ motion to dismiss this count is therefore denied.

Id. at *15-16.

And so, the battle will continue. But now it will be focused very much on preemption and the extent to which the pharmacy board’s regulations affect Massachusetts’ pharmacies’ willingness to carry and dispense Zohydro, an FDA approved drug. While we’ve been through three rounds already, this battle is only starting to heat up and get interesting. We’ll keep you posted.

Compare jurisdictions: Arbitration

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